Are we all Ndpers now?

According to a recent essay from the Ottawa- based Public Policy Forum, the decline in manufacturing jobs as a percentage of total employment over the past few decades represents a failure of free markets. Good jobs having been lost, the essay argued, the federal and provincial governments must now intervene by repatriating supply chains and financing domestic manufacturing as part of a “national manufacturing strategy.”

As it turns out, the essay was written by officials with the United Steelworkers, so their recommending massive government support for manufacturing wasn’t surprising. We would similarly expect solar companies to insist upon more generous green energy subsidies, or people who wrap cigars for a living to support the creation of a new cigar- wrapping tax credit. Everybody wants government handouts and favours, and unions are expert at getting them.

What is worrying is that many influential Conservatives — including Ontario Premier Doug Ford, members of his cabinet, and policy wonk and Post columnist Sean Speer — are now, along with unions, decrying free markets and advocating interventionist industrial policy to support manufacturing. Most notably, federal Conservative Leader Erin O’toole, indistinguishably from union leaders, has slammed “bad trade deals with the U.S.” and “corporate and financial elites who have been only too happy to outsource jobs abroad.”

O’toole’s affection for government- supported manufacturing, hostility towards financial markets, and other interventionist sensibilities are similar to the economic views of Oren Cass, policy director for Mitt Romney’s presidential campaign in 2012 and now head of American Compass, an organization dedicated to replacing the traditional conservative preference for free markets with industrial policy and other heresies.

Among these heresies is that nearly all workers should be covered by collective-bargaining rights. O’toole hasn’t yet gone that far but he has bemoaned the decline of private sector unions, and like Cass, he envisions a political realignment with conservatives supporting labour unions and bringing unionized workers into their voter coalition. Ironically, the unionization that O’toole thinks is so important to preserving good jobs actually encourages outsourcing by artificially inflating domestic labour costs.

In a speech to the Canadian Club last month, O’toole claimed it’s “now expected of a shareholder to ask a CEO: ‘ Why are we paying a worker in Oshawa 30 dollars an hour when we could be paying one in China 50 cents an hour?’” Given his protectionist sensibilities, concerned Canadians should be asking the Conservative leader whether he would prefer a government- enforced repatriation of supply chains to make Canadians pay $ 30 for manufacturing output that could be purchased abroad for $0.50.

Contrary to what O’toole seems to think, having the government bring back those manufacturing jobs won’t create good jobs or more prosperity. The worker in this hypothetical scenario wouldn’t really be earning $ 30 per hour, he would be earning $ 0.50 per hour ( the value of his output) and receiving $ 29.50 per hour in welfare, paid for by other Canadians. But it’s a strange welfare scheme that traps workers in jobs producing $0.50 of manufacturing output per hour instead of letting them transition to more productive work. It would guarantee economic stagnation.

There can be no economic progress without economic change. If the share of overall employment rises in some sectors it has to fall in others, and there is nothing unique about manufacturing. We have seen this before: Agricultural employment fell from 16 per cent of the labour force in 1951 to only six per cent in 1971, and then to under two per cent today. The result has been greater prosperity, not widespread unemployment and poverty, and it makes no more sense for government to implement an industrial policy to increase manufacturing employment than it would for government to try to restore all those lost agricultural jobs.

To be fair, industrial policy advocates have one legitimate argument: there may be security concerns in trading with bad actors like China. But such arguments should be met with skepticism when advocated by protectionists who also decry trade with the United States and who rely more on arguments about domestic employment than national security when advocating economic interventionism.

If free and open markets reveal that Canada’s comparative advantages are in sectors other than manufacturing, governments ought not to impede economic progress by intervening to save manufacturing jobs. Protectionist industrial policy and promoting labour unions and loopy welfare schemes are usually the purview of the NDP. Conservatives should reject such economic absurdities.

There can be no economic progress without economic change.